Utah home sellers drop asking prices as market slows from a frenzied pace

MIDVALE, Utah — Inflation, rising interest rates and fear of a recession are all working together against Utah’s real estate market.

For years, the Wasatch Front has been one of the nation’s hottest real estate markets. But now, it appears to be cooling as sellers are slashing prices.

So, what does this all mean for both sellers and buyers in Utah?

Bids on homes aren’t rolling in like they did at the height of the pandemic. Just months ago, sellers could expect bidding wars to push prices above the asking price. Now, prices are going the other way.

“I have had clients that have had to reduce their price,” said Realtor Jennifer Gilchrist of Utah Key Real Estate, “And that’s just because we are in the middle of this transitioning market.”

This transition shows up in the data.

In June, the Salt Lake metro area saw its share of homes with price cuts grow to 55.6%, according to the latest data from Redfin. That more than doubles last year’s share of 22.8%.

And in May, 42% of home sellers in Ogden, 45.8% of sellers in Salt Lake, and 47.8% of sellers in Provo dropped their asking price.

“The houses that we have on the market now have almost quadrupled within the last few months, but it’s still too low to sustain the amount of buyers who need to have homes,” Gilchrist explained. “We still have low inventory, but the demand has come down a little bit because the interest rates have gone up.”

While admitted business at her office has slowed, she said the market is still strong.

“Right now, I feel like buyers have decided that ‘You know what, I better jump in now while the opportunity is there before rates go any higher.’”

And Gilchrist sees this moment in the market as the first sweet spot for buyers in years.

“People who have been on the bubble of not being able to compete against the cash offers that we had been seeing are now able to hop in and actually not compete against 30 other buyers for a home and maybe actually get the seller to contribute to their closing costs and help them with some of the loan fees that they wouldn’t have before,” she said.

But gone are the days sellers could list their house for $20,000, $30,000, or $50,000 over their home’s market value. And gone are wild demands they would make of desperate buyers, such as paying for property repairs, covering the seller’s moving costs, or, try this one:

“I actually saw an addendum about a year ago,” said Gilchrist, “it said the buyer will rename their first child after the seller. It was real.”

But Gilchrist said sellers really need to pay attention to the pricing of competing houses on the market now instead of just basing their price on what was happening last year.

Oh, and no word yet if a buyer has had to name their first child after the seller with that addendum.